Fortress Biotech, Inc.

Unaudited Condensed Consolidated Balance Sheets

($ in thousands except for share and per share amounts)

Unaudited Condensed Consolidated Statements of Operations

($ in thousands except for share and per share amounts)

Unaudited Condensed Consolidated Statement of Changes in Stockholders’ Equity

($ in thousands except for share amounts)

For the Three Months Ended March 31, 2026

For the Three Months Ended March 31, 2025

Unaudited Condensed Consolidated Statements of Cash Flows

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Unaudited Condensed Consolidated Statements of Cash Flows

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1. Organization and Description of Business

Fortress Biotech, Inc. (“Fortress” or the “Company”) is a biopharmaceutical company focused on acquiring and advancing assets to enhance long-term value for shareholders through product revenue, equity holding and dividend and royalty revenue streams. Fortress works in concert with its extensive network of key opinion leaders to identify and evaluate promising products and product candidates for potential acquisition. The Company has executed arrangements in partnership with some of the world’s foremost universities, research institutes and pharmaceutical companies, including City of Hope National Medical Center, Dana-Farber Cancer Institute, Nationwide Children’s Hospital, Columbia University, the University of Pennsylvania, AstraZeneca plc, Dr. Reddy’s Laboratories, Ltd., and Sun Pharmaceutical Industries Limited (“Sun Pharma”).

Following the exclusive license or other acquisition of the intellectual property underpinning a product or product candidate, Fortress leverages its business, scientific, regulatory, legal and financial expertise to help its subsidiaries and partner companies achieve their goals. Partner and subsidiary companies then assess a broad range of strategic arrangements to accelerate and provide additional funding to support research and development, including joint ventures, partnerships, out-licensings, sales transactions, and public and private financings. To date, three partner companies are publicly-traded, andfour subsidiaries have consummated strategic partnerships with industry leaders, including AstraZeneca plc as successor-in-interest to Alexion Pharmaceuticals, Inc. (“AstraZeneca”), Sentynl Therapeutics, Inc. (“Sentynl”), Axsome Therapeutics, Inc. (“Axsome”), and Sun Pharma.

Our subsidiary and partner companies that are pursuing development and/or commercialization of biopharmaceutical products and product candidates are: Journey Medical Corporation (Nasdaq: DERM, “Journey”), Mustang Bio, Inc. (Nasdaq: MBIO, “Mustang”), Avenue Therapeutics, Inc. (OTC: ATXI, “Avenue”), Cellvation, Inc. (“Cellvation”), Cyprium Therapeutics, Inc. (“Cyprium”), Helocyte, Inc. (“Helocyte”), LemmaTx, Inc. (“LemmaTx”), Oncogenuity, Inc. (“Oncogenuity”) and Urica Therapeutics, Inc. (“Urica”). Checkpoint Therapeutics, Inc. (“Checkpoint”), previously a partner company, was acquired by Sun Pharma in May 2025. Baergic Bio, Inc. (“Baergic”), previously a subsidiary of Avenue, was acquired by Axsome in November 2025.

As used throughout this filing, the words “we”, “us” and “our” may refer to Fortress individually, to one or more of its subsidiaries and/or partner companies, or to all such entities as a group, as dictated by context. Generally, “subsidiary” refers to a private Fortress subsidiary, “partner company” refers to a public Fortress subsidiary, and “partner” refers to an entity with whom one of the foregoing parties has a significant business relationship, such as an exclusive license or an ongoing product-related payment obligation. The context in which any such term is used throughout this document, however, may dictate a different construal from the foregoing.

Liquidity and Capital Resources

Since inception, the Company’s operations have been financed primarily through the sale of equity and debt securities, from the sale of subsidiaries/partner companies, and the proceeds from the exercise of warrants. The Company has incurred losses from operations and negative cash flows from operating activities since inception and expects to continue to incur losses from operations for the next several years as it continues to develop and commercialize its existing and new product candidates. The Company is also required to comply with the financial covenants in its loan agreements as described in Note 9. Current cash and cash equivalents as of March 31, 2026 of $209.9 million for Fortress and private subsidiaries primarily funded by Fortress (“Parent Entity”) are considered sufficient to fund the Parent Entity’s operations for at least 12 months following the date of filing of this Quarterly Report on Form 10-Q. However, the Company may need to raise additional funding through strategic relationships, public or private equity or debt financings, sale of partner companies, grants or other arrangements to develop and prepare regulatory filings and obtain regulatory approvals for the existing and new product candidates, fund operating losses, and, if deemed appropriate, establish or secure through third parties manufacturing for the potential products, sales and marketing capabilities. If such funding is not available or not available on terms acceptable to the Company, the Company’s current development plans and plans for expansion of its general and administrative infrastructure may be curtailed. Fortress also has the ability, subject to limitations imposed by Rule 144 of the Securities Act of 1933 and other applicable laws and regulations, to raise money from the sale of common stock of the public companies in which it has ownership positions.

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the unaudited interim condensed consolidated financial statements reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the balances and results for the periods presented. Certain information and footnote disclosures normally included in the Company’s annual financial statements prepared in accordance with GAAP have been condensed or omitted. These condensed consolidated financial statement results are not necessarily indicative of results to be expected for the full fiscal year or any future period.

The unaudited condensed consolidated financial statements and related disclosures have been prepared with the presumption that users of the unaudited condensed consolidated financial statements have read or have access to the audited financial statements for the preceding fiscal year for each of Avenue, Mustang and Journey. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K, which was filed with the United States Securities and Exchange Commission (“SEC”) on March 31, 2026 (the “2025 Form 10-K”), from which the Company derived the balance sheet data at December 31, 2025, as well as Mustang’s Form 10-K, filed with the SEC on March 19, 2026, Avenue’s Form 10-K, filed with the SEC on March 30, 2026, and Journey’s Form 10-K, filed with the SEC on March 26, 2026.

The Company’s unaudited condensed consolidated financial statements include the results of the Company’s subsidiaries for which it has voting control but does not own 100% of the outstanding equity of the subsidiaries. For consolidated entities where the Company owns less than 100% of the subsidiary, but retains voting control, the Company records net loss attributable to non-controlling interests in its consolidated statements of operations and presents non-controlling interests as a component of stockholders’ equity on its consolidated balance sheets. All intercompany income and/or expense items are eliminated entirely in consolidation prior to the allocation of net gain/loss attributable to non-controlling interest, which is based on ownership interests as calculated quarterly for each subsidiary.

Use of Estimates

The preparation of the Company’s unaudited condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the unaudited condensed consolidated financial statements and the reported amounts of expenses during the reporting period. The Company’s significant estimates include, but are not limited to provisions for coupons, chargebacks, wholesaler fees, specialty pharmacy discounts, managed care rebates, product returns, inventory realization, valuation of intangible assets, useful lives assigned to long-lived assets and amortizable intangible assets, fair value of equity investments, stock options and warrants, stock-based compensation, common stock issued to acquire licenses, accrued expenses and contingencies. Due to the uncertainty inherent in such estimates, actual results may differ from these estimates.

Segment Reporting

The Company views its operations and manages its business in segments that align with the Company’s public subsidiaries with Fortress being comprised of the parent entity and the private subsidiaries, including intersegment revenue consisting of various fees paid by the subsidiaries to Fortress that are eliminated in consolidation. Each public subsidiary is a biopharmaceutical company focused on acquiring, developing, and commercializing assets in different therapeutic and disease areas. The Company’s chief operating decision maker (“CODM”) is its chief executive officer.

The CODM reviews profit and loss information for each segment to assess the performance of the Company and each of its public subsidiaries. The accounting policies of the segments are the same as those described in this Note 2. See Note 16 for segment information.

Investment in Equity Securities

The Company invests in certain entities over which it holds significant influence but not control. Generally, such investments would be accounted for using the equity method of accounting. However, for those investments for which the Company has elected the fair value option, the Company measures such investments at fair value on the condensed consolidated balance sheet with subsequent changes in fair value recognized in other (income) expense, net on the Company’s condensed consolidated statement of operations. The Company elected the fair value option for certain investments that would otherwise have been accounted for using the equity method because the Company believes that fair value measurement provides more relevant information for users of its financial statements and is consistent with the Company’s investment strategy.

Restricted Cash

The Company records cash held in trust or pledged to secure certain debt obligations as restricted cash. As of March 31, 2026 and December 31, 2025, the Company had $1.2 million of restricted cash representing pledges to secure letters of credit in connection with certain office leases.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash from the unaudited condensed consolidated balance sheets to the unaudited condensed consolidated statements of cash flows as of the dates presented:

Significant Accounting Policies

There have been no material changes in the Company’s significant accounting policies to those previously disclosed in the 2025 Form 10-K.

Recently Issued Accounting Pronouncements

As of March 31, 2026, there were no new accounting pronouncements or updates to recently issued accounting pronouncements disclosed in the 2025 Form 10-K that affect the Company’s present or future results of operations, overall financial condition, liquidity, or disclosures upon adoption.

3. Asset Purchase and Merger Agreements

Cyprium Agreement with Sentynl

Cyprium is party to a development and asset purchase agreement with Sentynl, pursuant to which Sentynl assumed control of the development and commercialization of CUTX-101 (now marketed as ZYCUBO) in December 2023. In connection with such assumption by Sentynl, Cyprium received a $4.5 million payment and was no longer responsible for development activities. Cyprium is eligible to receive up to $128 million in aggregate sales-based milestone payments, as well as tiered royalties on net sales ranging from 3% to 12.5%.

Royalty revenue is recognized as the underlying sales occur in accordance with the sales- or usage-based royalty exception under ASC 606. For the three months ended March 31, 2026, Cyprium recognized $0.1 million in royalty revenue related to net sales of ZYCUBO.

In January 2026, the U.S. Food and Drug Administration (“FDA”) approved ZYCUBO for the treatment of Menkes disease in pediatric patients. In connection with the approval, a Rare Pediatric Disease priority review voucher (“PRV”) was issued and transferred to Cyprium.

In February 2026, Cyprium entered into an asset purchase agreement to sell the PRV (the “PRV APA”) for gross proceeds of $205 million. The transaction closed on March 30, 2026. In connection with the closing of the PRV sale, Cyprium is obligated to remit 20% of the gross proceeds, or $41 million, to the Eunice Kennedy Shriver National Institute of Child Health and Human Development (“NIH”) and 2.5% of gross proceeds, or $5.1 million, to a third-party pursuant to an agreement. These amounts are included in accrued expenses at March 31, 2026 (see Note 10). In addition, Cyprium is obligated to pay the third-party 4.0% of all royalty and milestone payments received in excess of an aggregate of $25.0 million, inclusive of certain specified prior payments.

In connection with the closing of the PRV sale, Cyprium’s preferred stock was automatically redeemed in accordance with its terms (see Note 15).

Checkpoint Transaction

In March 2025, the Company’s then-subsidiary Checkpoint entered into a merger agreement with Sun Pharma. The merger transaction under such agreement closed on May 30, 2025, resulting in the deconsolidation of Checkpoint. The Company received total cash proceeds of $28.0 million and recognized a gain on deconsolidation of $27.1 million after derecognizing Checkpoint’s net liabilities and noncontrolling interests. The Company determined that the transaction did not represent a strategic shift and therefore was not accounted for as a discontinued operation.

Pursuant to the merger, former Checkpoint shareholders received $4.10 in cash and one non-tradable contingent value right (“CVR”) per share. The CVRs entitle holders to contingent cash payments of up to $0.70 upon the achievement of specified regulatory milestones related to cosibelimab approval in certain European markets within defined time periods.

The Company accounted for the CVR as variable consideration that is constrained until the underlying milestones are achieved. As of March 31, 2026, no milestones have been met andno amounts have been recognized.

In connection with the transaction, Fortress is entitled to receive royalties equal to 2.5% of worldwide net sales of certain products under a royalty agreement with Sun Pharma. No royalty revenue was recognized during the three months ended March 31, 2026.

The Company also entered into a transition services agreement with Checkpoint, which ended in September 2025.

Urica Agreement with Crystalys Therapeutics, Inc. (“Crystalys”)

In July 2024, Urica entered into an asset purchase agreement and related agreements with Crystalys, pursuant to which Urica sold the rights to its dotinurad program and related intellectual property. In consideration, Urica received equity representing approximately 35% of Crystalys’ outstanding shares, subject to anti-dilution protections, with a minimum ownership of 15% until certain financing thresholds are met. Anti-dilution shares valued at $1.0 million were received in the three months ended March 31, 2026 (see Note 6). At March 31, 2026, Urica held approximately 15% of Crystalys’ fully diluted equity. The investment is accounted for under the equity method, for which the Company elected the fair value option.

The Company has the right to appoint a director to Crystalys’ board of directors. Urica is also entitled to a 3% secured royalty on future net sales of dotinurad; such royalties are considered variable consideration and are constrained, andno revenue has been recognized.

The agreements included a repurchase option allowing Urica to reacquire the assets for up to $6.4 million plus accrued interest. Prior to the expiration of this repurchase option, amounts received were recorded as a liability and accreted to the repurchase price, with accretion recognized as interest expense. For the quarter ended March 31, 2025, accretion of $0.7 million was included in interest expense and financing fees in the condensed consolidated statement of operations. In September 2025, upon the closing of Crystalys’ Series A financing, the repurchase option expired and the Company reversed the related $2.6 million liability, recognizing the amount as other income for the year ended December 31, 2025.

Avenue

Under a share repurchase agreement between Avenue and InvaGen Pharmaceuticals, Inc. (“InvaGen”) under which Avenue repurchased all of InvaGen’s shares in Avenue, Avenue agreed to pay InvaGen an additional amount as a contingent fee, payable in the form of seven and a half percent (7.5%) of the net proceeds of future financings, up to $4.0 million, which Avenue accounts for as a derivative. Due to the uncertainty related to future financings, the estimated fair value of the derivative is not material. Avenue recognizes changes in fair value within general and administrative expenses in the statement of operations. In connection with equity financings, in the three months ended March 31, 2025, Avenue made payments totaling $0.2 million to InvaGen. No such payments were owed or made for the quarter ended March 31, 2026. Approximately $1.4 million in aggregate has been paid by Avenue to InvaGen under the share repurchase agreement through March 31, 2026.

4. Inventory

5. Property and Equipment

Fortress' depreciation expense for the three months ended March 31, 2026 and 2025 was approximately $0.1 million and $0.1 million, respectively. Fortress’ depreciation expense is recorded in both research and development expense and selling, general and administrative expense in the condensed consolidated statement of operations.

6. Fair Value Measurements

Urica’s Equity Investment in Crystalys

Urica values its equity investment in Crystalys using a valuation technique based on significant unobservable inputs (Level 3 in the fair value hierarchy), including an option pricing model backsolve method. As of March 31, 2026, there were no changes in valuation methodology or significant assumptions from those used at December 31, 2025.

During the three months ended March 31, 2026, Urica received approximately 2.3 million additional shares in Crystalys pursuant to anti-dilution provisions, resulting in a $1.0 million increase in the carrying value of the investment. As of March 31, 2026, the total fair value of the Crystalys investment was $16.1 million. No impairments or other adjustments to fair value were recorded during the period. There are significant judgments and estimates inherent in the determination of the fair value, such as those regarding the selection of comparable companies used in estimating volatility, and the probability of possible future events. Such estimates involve inherent uncertainties and the application of significant judgment. Changes in judgements could have a material impact on our results of operations.

Fair Value of Aevitas

The Company valued its retained investment in Aevitas, which is accounted for as an equity method investment for which the Company elected the fair value option, and estimated the fair value using level 3 inputs to be $2.6 million. The Company has not recognized any gains, losses, or impairments on the investment in 2026, 2025, or on a cumulative basis.

Common Stock Warrant Liabilities

Avenue

Avenue has previously issued freestanding warrants to purchase shares of its common stock in connection with financing activities. Avenue’s outstanding warrants to purchase common stock were originally issued in October 2022 (the “October 2022 Warrants”). The October 2022 Warrants are classified as liabilities on the balance sheet as they contain terms for redemption of the underlying security that are outside of its control. In connection with the Avenue January 2023 registered direct offering in January 2023, the down-round price protection feature was triggered and the exercise price for the October 2022 Warrants was permanently adjusted to $116.25, which was the offering price for the Avenue registered direct offering in January 2023. The Black-Scholes model was used to value the October 2022 Warrants and at March 31, 2026 and December 31, 2025 the liability associated with the October 2022 Warrants wasnil and $1,000, respectively.

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Avenue warrant liability that are categorized within Level 3 of the fair value hierarchy was as follows:

Partner Company Derivative Liability

The partner company derivative liability associated with Cyprium’s 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock (“Cyprium PPS”) increased in fair value by $7.1 million during the three months ended March 31, 2026. The increase in fair value was due to the settlement of the derivative in connection with the redemption of the Cyprium PPS (Level 1) and the liability was extinguished in connection with the redemption of the PPS (see Note 15).

As of March 31, 2026, no transfers occurred between Level 1, Level 2, and Level 3 instruments.

7. Intangible Assets, net

The Company’s finite-lived intangible assets consist of intangible assets acquired by Journey. The table below provides a summary of the Journey intangible assets for the periods presented:

For the three months ended March 31, 2026 and 2025, Journey’s amortization expense related to its product licenses was $1.1 million and $1.1 million, respectively.

In December 2025, Journey received FDA approval for the anti-itch product acquired in 2020. Prior to FDA approval, the anti-itch product had been presented as an intangible asset not yet placed in service totaling $3.9 million. Journey began amortizing the anti-itch intangible asset in January 2026.

The future amortization of intangible assets is as follows:

8. License Agreements

Avenue

License for clenbuterol (“ATX-04”)

In February 2026, Avenue entered into a license agreement with Duke University (“Duke”), pursuant to which Avenue obtained an exclusive worldwide license (the "ATX-04 License") from Duke to certain patents and know-how pertaining to ATX-04, a selective β2-adrenergic agonist for Pompe disease, for the treatment of lysosomal storage diseases.

Under the ATX-04 License, Avenue made an upfront payment to Duke and has an obligation to make development, regulatory, and commercial milestone payments upon the achievement of certain milestones. In addition, Avenue is obligated to pay a tiered low single-digit royalty on future net sales of ATX-04.

Beginning with calendar year 2028 and until first regulatory approval, Avenue is obligated to make minimum annual royalty payments. In the event the ATX-04 License is terminated, minimum royalty obligations will cease, and Avenue will only be responsible for amounts due up to the termination date.

In accordance with ASC 730-10-25-1, Research and Development, costs incurred in obtaining technology licenses are charged to research and development expense if the technology licensed has not reached technological feasibility and has no alternative future use. The licenses purchased by the Company require substantial completion of research and development, regulatory and marketing approval efforts in order to reach technological feasibility and have no alternate use. For the three months ended March 31, 2026, there was a nominal amount of expense recognized by Avenue for the ATX-04 License.

AnnJi Pharmaceutical Co. Ltd. (“AnnJi”)* *License Termination

In April 2025, Avenue and AnnJi entered into a License Termination and Program Transfer Agreement, pursuant to which the prior license agreement for AJ201 was terminated, the parties dismissed all pending dispute resolution proceedings and provided mutual releases of claims, and Avenue transferred all rights to the program back to AnnJi. Avenue also agreed to a 48-month non-compete in specified territories.

In connection with the termination, Avenue repurchased shares previously issued to AnnJi for nominal consideration and paid $0.2 million for legal expense reimbursement, which was accounted for as consideration payable to a customer and reduced revenue recognized.

AnnJi agreed to pay Avenue $1.6 million (net of withholding taxes), which was recognized as revenue upon transfer of the underlying rights during the quarter ending June 30, 2025.

Avenue is also eligible to receive (i) up to $5.0 million in development and regulatory milestones, (ii) up to $17.0 million in commercial milestones, (iii) royalties of 1.75% on net sales of AJ201, subject to reduction in certain circumstances, and (iv) a share of sublicensing income, subject to specified caps and minimums. These amounts represent variable consideration and are constrained until the achievement of the specified milestones.

Journey

Journey holds global rights to Emrosi™ (Minocycline Hydrochloride Modified Release Capsules, 40 mg) pursuant to a license agreement with Dr. Reddy’s Laboratories, Ltd. (“DRL”), under which Journey has made upfront and milestone payments, including $15.0 million upon FDA approval in November 2024, at which time the licensed assets were assigned to Journey. Journey may be required to make additional regulatory and commercial milestone payments of up to $150.0 million and pays royalties ranging from 10% to 14% on net sales, subject to reduction in certain circumstances.

In 2022, Journey acquired Amzeeq® and Zilxi® from Vyne Therapeutics, Inc., including contingent sales-based milestone payments of up to $450.0 million. As part of the transaction, Journey assumed a license agreement with Cutia Therapeutics (HK) Limited (“Cutia”), under which Cutia has rights to commercialize the products in Greater China and Journey supplies finished product and earns low single-digit royalties on net sales.

In August 2025, Journey commenced commercial supply of product to Cutia and recognized $40,000 of other revenue for the three months ended March 31, 2026 related to product sales.

9. Debt and Interest

Debt

Total debt consists of the following:

As of March 31, 2026, the carrying value of the notes payable approximates their fair value as the interest rates are variable and approximate the market rates for loans with similar terms and risk characteristics.

2024 Oaktree Note

In July 2024, the Company entered into a $50.0 million senior secured credit agreement (the “2024 Oaktree Agreement”), as amended (the “New Oaktree Agreement”). The Company borrowed $35.0 million at closing and may draw up to an additional $15.0 million, subject to lender approval. The loans bear interest at a rate equal to the three-month SOFR plus 7.625% (subject to a 2.50% floor and 5.75% cap), have an interest-only period through maturity, and mature on June 30, 2028. At March 31, 2026, the interest rate applicable to the 2024 Oaktree Note was 11.3%. The Company is required to make quarterly interest-only payments until the maturity date, except 12.5% of the then-outstanding principal balance of the loans is due on September 30, 2027,12.5% of the principal balance of the loans is due on December 31, 2027,37.5% of the principal balance of the loans is due on March 31, 2028, with the remaining principal amount due on the maturity date.

The New Oaktree Agreement contained customary affirmative and negative covenants and financial covenants, including minimum liquidity, minimum net sales, capital raise requirements, and minimum ownership thresholds, each subject to specified thresholds and conditions. The Company’s obligations are secured by substantially all of its assets.

In February 2026, the Company entered into the Second Amendment to the New Oaktree Agreement, which modified certain financial covenants. Upon the occurrence of a Cyprium monetization event related to the sale of the PRV and if the outstanding principal balance is less than or equal to $15.0 million, the minimum liquidity requirement is reduced to $2.0 million and the minimum net sales, capital raise, and minimum ownership of Journey covenants are eliminated. These covenants are no longer applicable if the outstanding principal balance is less than or equal to $10.0 million.

The Second Amendment also required the Company to apply proceeds from a Cyprium monetization event to repay amounts advanced to Cyprium and to make a mandatory prepayment of $10.0 million, plus accrued interest and applicable fees, under the credit agreement.

During the three months ended March 31, 2026, the Company made aggregate prepayments on the loan, including the required monetization-related prepayment, reducing the outstanding principal balance to $15.0 million. As a result, the minimum liquidity requirement was reduced to $2.0 million, and the minimum net sales, capital raise, and minimum stake in Journey covenants are no longer applicable.

The Company was in compliance with all applicable financial covenants under the New Oaktree Agreement as of March 31, 2026.

SWK Term Loan

In December 2023, Journey entered into a Credit Agreement (the “Credit Agreement”) with SWK Funding LLC (“SWK”). The Credit Agreement provides for a term loan facility (the “Credit Facility”) in the original principal amount of up to $20.0 million. On the closing date of the facility, Journey drew $15.0 million. In June 2024, Journey drew the remaining $5.0 million under the Credit Facility. In July 2024, Journey entered into an amendment (the “First Amendment”) to the Credit Agreement with SWK. The First Amendment increased the original principal amount of the Credit Facility from $20.0 million to $25.0 million. The $5.0 million of additional principal added in the First Amendment was contractually required to be drawn upon FDA approval of Emrosi, subject to Journey receiving approval on or before June 30, 2025. Journey received FDA approval for Emrosi in November 2024 and drew on the remaining $5.0 million.

Term loans under the Credit Facility (“SWK Term Loans”) accrue interest, which is payable quarterly in arrears, and bear interest at a rate per annum equal to the three-month term SOFR (subject to a SOFR floor of 5%) plus 7.75%. The interest rate resets quarterly.

In September 2025, Journey entered into the Third Amendment to the Credit Agreement (the “Third Amendment”). The Third Amendment, among other things, extends the maturity date of Journey’s existing Credit Facility from December 27, 2027 to June 27, 2028. The Third Amendment also modifies the Revenue-Based Payment provision, as defined in the Credit Agreement, by lowering the applicable revenue threshold, measured based on the twelve months ended December 31, 2025, from $70.0 million to $60.0 million. Journey satisfied the $60.0 million Revenue-Based Payment provision as of December 31, 2025. Accordingly, the interest-only period under the Credit Facility was extended byone year, with scheduled principal repayments commencing in February 2027 rather than February 2026. Thereafter, Journey will make quarterly principal payments equal to $2.5 million per quarter, or 10.0%, of the outstanding principal amount of the funded SWK Term Loans, with any remaining principal balance due on the maturity date.

Journey may at any time prepay the outstanding principal balance of the SWK Term Loans in whole or in part. Upon repayment in full of the SWK Term Loans, Journey will pay an exit fee equal to 5% of the original principal amount of the SWK Term Loans. Additionally, Journey paid an origination fee of $0.2 million on the closing date of the Credit Facility and incurred issuance costs of $0.2 million, both of which have been recorded as a debt discount. Journey is accreting the carrying value of the SWK Term Loans to the original principal balance plus the exit fee over the term of the loan using the effective interest method. The amortization of the discount is accounted for as interest expense. The effective interest rate on the SWK Term Loans as of March 31, 2026 was 14.1%.

The Credit Facility also includes both revenue and liquidity covenants, restrictions as to payment of dividends, and is secured by substantially all assets of Journey. As of March 31, 2026, Journey was in compliance with the financial covenants under the Credit Facility.

Interest Expense

Interest expense includes contractual interest, and fees include amortization of the debt discount and amortization of fees associated with loan transaction costs, amortized over the life of the loan. The following table shows the components of interest expense for all debt arrangements during the periods presented:

Note 1: Relates to Urica’s optional repurchase obligation to Crystalys (see Note 3), which expired in 2025.

10. Accounts Payable and Accrued Expenses

Accounts payable and accrued expenses consisted of the following:

11. Non-Controlling Interests

The Company’s ownership interests in its consolidated subsidiaries at March 31, 2026 was similar to December 31, 2025, with the exception of increases at the public subsidiaries that pay a Payment-in-Kind (“PIK”) dividend to Fortress (see Note 15): Avenue increased 3.1%, and Mustang increased 4.0%. Cyprium increased 6.5% due to the conversion of a portion of the intercompany note payable balance into equity during the quarter ended March 31, 2026 (see Note 15).

12. Net Income (Loss) per Common Share

Basic net income or loss per share attributed to common stockholders is calculated by dividing the net income or loss attributed to Fortress, less the Series A Preferred dividends and subsidiary deemed dividends, by the weighted-average number of shares of Common Stock outstanding during the period, not including unvested restricted stock and other potentially dilutive securities. Diluted net income (loss) per share of common stock includes the effect, if any, from the potential exercise or conversion of securities, such as warrants, stock options, restricted stock units, and restricted stock using the treasury stock method, if dilutive. The impact of these items is anti-dilutive during periods of net loss.

For the three months ended March 31, 2026 and 2025, the effect on the net income (loss) per share calculation from Series A Preferred dividends (paid and cumulated but undeclared) (see Note 13) was $2.0 million and $2.0 million, respectively, and partner company preferred and deemed dividends werenil and $0.1 million, respectively.

The following potentially dilutive securities were excluded from the computation of net income (loss) per common share for the periods presented because their effect would have been anti-dilutive:

The computation of basic and diluted net income (loss) per common share is as follows:

13. Stockholders’ Equity

9.375%* Series A Cumulative Redeemable Perpetual Preferred Stock Dividends*

In July 2024, Fortress announced that the Company’s Board of Directors had paused the monthly dividend of $0.1953125 per share of the Company’s 9.375% Series A Cumulative Redeemable Perpetual Preferred Stock (the “Series A Preferred Stock”). In accordance with the terms of the Series A Preferred Stock, dividends on the Series A Preferred Stock will continue to accrue and cumulate until such dividends are authorized or declared. The Board intends to revisit its decision regarding the monthly dividend regularly and will assess the profitability and cash flow of the Company to determine whether and when the pause should be lifted.

During the three months ended March 31, 2026, no dividends were declared by the Board of Directors. Dividends in arrears that have not been declared by the Board of Directors are not recorded in the condensed consolidated balance sheets but are reflected in the net income (loss) attributable to common stockholders (see Note 12). As of March 31, 2026, the Company has total undeclared dividends of approximately $14.0 million, including the cumulated (but undeclared) dividends due to Series A Preferred shareholders for the three months ended March 31, 2026 and 2025 of $2.0 million and $2.0 million, respectively.

Stock-based Compensation

As of March 31, 2026, the Company had the following equity compensation plans: the Fortress Biotech, Inc. 2013 Stock Incentive Plan, as amended (the “2013 Plan”), the Fortress Biotech, Inc. 2012 Employee Stock Purchase Plan (the “ESPP”) and the Fortress Biotech, Inc. Long Term Incentive Plan (“LTIP”). As of March 31, 2026, approximately 7.3 million shares are available for issuance under the 2013 Plan, and approximately 0.9 million shares are available for issuance under the ESPP.

The following table summarizes the stock-based compensation expense from employee stock purchase programs and restricted Common Stock awards and warrants for the periods presented:

Restricted Stock and Restricted Stock Units

The following table summarizes Fortress restricted stock awards and restricted stock units activities, excluding activities related to Fortress subsidiaries and partner companies:

As of March 31, 2026 and 2025, the Company had unrecognized stock-based compensation expense related to restricted stock and restricted stock unit awards of approximately $8.8 million and $8.3 million, respectively, which is expected to be recognized over the remaining weighted-average vesting period of 5.0 years and 2.1 years, respectively.

Amended and Restated Long-Term Incentive Program (“LTIP”)

On July 15, 2015, the Company’s stockholders approved the LTIP for the Company’s Chairman, President and Chief Executive Officer, Dr. Rosenwald, and Executive Vice Chairman, Strategic Development, Mr. Weiss (amended and restated with stockholder approval on June 7, 2017 and May 23, 2024). The LTIP consists of a program to grant equity interests in the Company and in the Company’s subsidiaries, and a performance-based bonus program that is designed to result in performance-based compensation that is deductible without limit under Section 162(m) of the Internal Revenue Code of 1986, as amended.

During the three months ended March 31, 2026 and 2025, the Compensation Committee granted 475,424 shares and 454,163 shares, respectively, to each of Dr. Rosenwaldand Mr. Weiss under the Company’s Long-Term Incentive Plan (“LTIP”). Each grant represented approximately 1% of the Company’s total outstanding shares as of the respective grant dates.

The restricted shares vest upon the earlier of: (i) (A) the Company achieving a specified increase in market capitalization from the grant date and (B) the participant’s continued service through, or involuntary termination prior to, July 16, 2035 (for the 2026 grant) or July 16, 2025 (for the 2025 grant); or (ii) a change in control of the Company, provided the participant remains in service through the date of such transaction.

Unvested shares are subject to repurchase by the Company at a nominal price for a period of 90 days following the earlier of (i) the applicable service date described above or (ii) the participant’s voluntary termination of service.

The grant date fair value of these awards was approximately $1.5 million for the 2026 grants and $0.9 million for the 2025 grants. For the three months ended March 31, 2026 and 2025, the Company recognized stock-based compensation expense related to LTIP grants of approximately $12,000 and $2.5 million, respectively, in its unaudited condensed consolidated statements of operations.

Warrants

The following table summarizes Fortress warrant activities, excluding activities related to Fortress subsidiaries and partner companies:

During the three months ended March 31, 2026,694,296 warrants were exercised for gross proceeds of $1.2 million. As of March 31, 2026, Fortress hadno unrecognized stock-based compensation expense related to warrants.

Capital Raises

2024 Shelf

On May 17, 2024, the Company filed a shelf registration statement (File No. 333-279516) on Form S-3, which was declared effective on May 30, 2024 (the “2024 Shelf”). As of March 31, 2026, $42.1 million of securities were available for sale under the 2024 Shelf, subject to General Instruction I.B.6. of Form S-3, known as the “baby shelf rules,” which limit the number of securities that can be sold under registration statements on Form S-3. However, on July 5, 2024, the board of directors paused the payment of dividends on our Series A Preferred Stock until further notice. As a result, the Company is not currently eligible to use Form S-3 and has lost the ability to use the 2024 Shelf.

The Company will regain eligibility to use the 2024 Shelf on the date it files its next Annual Report on Form 10-K, so long as it has: (i) by that date, paid all accrued but unpaid dividends at that time and (ii) timely paid all dividends accruing since the end of the fiscal year to which such Form 10-K relates.

Because the Company is not currently eligible to use Form S-3 due to the failure to pay dividends on the Series A Preferred Stock, on April 1, 2025 the Company filed a post-effective amendment to certain prior Form S-3 registration statements to continue the registration of certain previously issued warrants. This post-effective amendment was declared effective by the SEC on April 2, 2025.

At the Market Offering

During the three months ended March 31, 2026, the Company didnot issue any shares under the Company’s at-the-market offering program. During the three months ended March 31, 2025, the Company issued and sold approximately 0.5 million shares at an average price of $1.94 for net proceeds of $1.0 million under the Company’s at-the-market offering program. The at-the-market offering program is currently suspended as a result of the Company’s current ineligibility to use Form S-3 registration statements.

Checkpoint 2025 Warrant Exercises

In January 2025, Checkpoint received approximately$2.1 million from the exercise of warrants for the issuance of 740,000 shares of common stock with an exercise price of$2.84 per share.

In March 2025, Checkpoint received approximately $36.0 million from the exercise of warrants for the issuance of 21,691,003 shares of common stock with an average exercise price of $1.66 per share.

Pursuant to the Company’s Founders Agreement with Checkpoint, Checkpoint issued to Fortress 2.5% of the aggregate number of shares of common stock issued in the January 2025 warrant exercises noted above. Accordingly, Checkpoint issued 18,500 shares of common stock to Fortress in the three months ended March 31, 2025.

Avenue At the Market Offering

In May 2024, Avenue entered into an At-the-Market Offering Agreement (the “Avenue ATM”) under which Avenue was able to offer and sell, from time to time at its sole discretion, up to $3.9 million of shares of its common stock. The offers and sales of the shares were made pursuant to Avenue’s Form S-3 registration statement declared effective in 2021, and the related prospectus supplement dated May 10, 2024. During the three months ended March 31, 2025, Avenue issued 0.9 million shares through the Avenue ATM for net proceeds of $2.1 million. Avenue is no longer able to utilize the Avenue ATM as a result of the delisting of its stock from trading on the Nasdaq effective July 18, 2025.

Pursuant to the Company’s Founders Agreement with Avenue, Avenue issued to Fortress 2.5% of the aggregate number of shares of common stock issued in the offering noted above. Accordingly, Avenue issued 23,474 shares of common stock to Fortress for the three months ended March 31, 2025.

Mustang 2024 Shelf Registration Statement and At-the-Market Offering (the “Mustang ATM”)

On May 31, 2024, Mustang filed a shelf registration statement on Form S-3 (File No. 333-279891) (the “Mustang 2024 S-3”), which was declared effective on June 12, 2024. Under the Mustang 2024 S-3, Mustang may sell up to a total of $40.0 million of its securities. As of March 31, 2026, approximately $34.2 million under the Mustang 2024 S-3 remains available for sales of securities, subject to General Instruction I.B.6. of Form S-3, known as the “baby shelf rules,” which limit the amount of securities it can sell under its registration statements on Form S-3 in any 12-month period.

On May 31, 2024, Mustang entered into an At-the-Market Offering Agreement (the “Mustang ATM”) relating to the sale of shares of common stock pursuant to the Mustang 2024 S-3. During the three months ended March 31, 2026, Mustang didnot issue any shares in connection with its ATM agreement. For the three months ended March 31, 2025, Mustang issued approximately 54,000 shares through the Mustang ATM for net proceeds of approximately $0.6 million.

Mustang February 2025 Equity Offering

In February 2025, Mustang closed on an equity offering of (i)495,000 shares of its common stock, par value $0.0001 per share (the “Shares”), (ii) pre-funded warrants to purchase up to an aggregate of 2,162,807 shares of common stock (the “Pre-Funded Warrant Shares), (iii) Series C-1 warrants (the “Series C-1 Warrants”) to purchase up to 2,657,807 shares of common stock, and (iv) Series C-2 warrants (the “Series C-2 Warrants”)to purchase up to 2,657,807 shares of common stock. Each Share or Pre-Funded Warrant was sold together with one Series C-1 Warrant to purchase one share of common stock and one Series C-2 Warrant to purchase one share of common stock. The combined public offering price for each Share and accompanying Warrants was $3.01, and the combined public offering price for each Pre-Funded Warrant and accompanying Warrants was $3.0099. The Pre-Funded Warrants had an exercise price of $0.0001 per share, were exercisable immediately upon issuance and expired when exercised in full. Each Warrant has an exercise price of $3.01 per share and became exercisable beginning on the effective date of stockholder approval of the issuance of the Warrant Shares (the “Warrant Stockholder Approval”). The Series C-1 Warrants expire five years from the date of stockholder approval and the Series C-2 Warrants expire twenty-four months from the date of stock holder approval. The warrants contain customary anti-dilution adjustments to the exercise price, including share splits, share dividends, rights offerings and pro rata distributions. The net proceeds of the offering, after deducting the fees and expenses of the placement agent in the transaction, and other offering expenses payable by Mustang, but excluding the net proceeds from the exercise of the Warrants, was approximately $6.8 million.

Pursuant to the Company’s Founders Agreement with Mustang, Mustang issued to Fortress 2.5% of the aggregate number of shares of common stock issued in the equity offering and ATM sales noted above. Accordingly, Mustang issued 67,806 shares of common stock to Fortress for the three months ended March 31, 2025.

Journey 2022 Shelf Registration Statement and At-the-Market Offering

On December 30, 2022, Journey filed a shelf registration statement on Form S-3 (File No. 333-269079) (the “Journey 2022 S-3”), which was declared effective on January 26, 2023. The Journey 2022 S-3 covered the offering, issuance and sale by Journey of up to an aggregate of $150.0 million of Journey’s common stock, preferred stock, debt securities, warrants, and units.

In August 2025, Journey executed a new At Market Issuance Sales Agreement (the “Journey 2025 ATM Sales Agreement”) with B. Riley Securities, Inc. and Lake Street Capital Markets, LLC (each, an “Agent” and together, the “Agents”) replacing the previous December 30, 2022 At Market Issuance Sales Agreement with B. Riley. In accordance with the terms of the Journey 2025 ATM Sales Agreement, Journey may offer and sell up to 3,750,000 shares of common stock, from time to time through or to the Agents, each acting as sales agent or principal.

On January 15, 2026, Journey filed a shelf registration statement on Form S-3 (File No. 333-292758) (the “Journey 2026 S-3”), which was declared effective by the SEC on January 21, 2026. This shelf registration statement covers the offering, issuance and sale by Journey of up to an aggregate of $150.0 million of its common stock, preferred stock, debt securities, warrants, and units. The Journey 2026 S-3 replaces the Journey 2022 S-3. Sales under the Journey 2025 Sales Agreement since the effective date are made under the Journey 2026 S-3.

During the three months ended March 31, 2026, Journey didnot issue any shares in connection with its ATM agreement. For the three months ended March 31, 2025, Journey issued approximately 0.8 million shares under the Journey 2025 ATM Sales Agreement for gross proceeds of approximately $4.1 million.

14. Commitments and Contingencies

Leases

New York, NY Sublease - Fortress

On February 10, 2026, the Company entered into a sublease agreement with a third party to sublease all of its leased office space in New York, NY, consisting of approximately 23,000 square feet, under its existing lease with Sage Realty Corporation (the “Landlord”). The Company obtained the Landlord’s consent to the sublease, and the sublease commenced on March 15, 2026. The sublease expires on August 31, 2031.

Pursuant to the sublease agreement, the Company expects to receive approximately $11.9 million in aggregate base rent payments over the term of the sublease. The Company remains primarily liable for the obligations under the original lease.

For the three months ended March 31, 2026, the Company continued to recognize lease expense under the original lease agreement and recognized sublease income from the sublease commencement date of March 15, 2026. Sublease income is recognized on a straight-line basis over the sublease term. The Company has elected to present sublease income as a reduction of lease expense within the condensed consolidated statement of operations.

Lease Termination – Mustang

In February 2025, Mustang concurrently exited the lease of its manufacturing facility in Worcester, Massachusetts, relocating its corporate headquarters to 95 Sawyer Road, Waltham, Massachusetts, and divested certain fixed assets including furniture and equipment to AbbVie Bioresearch Center, Inc. for $1.0 million. In connection with the lease termination, Mustang recorded a net gain on lease termination of $0.4 million recorded in research and development expenses on the condensed consolidated statement of operations.

During the three months ended March 31, 2026 and 2025, the Company recorded the following as lease costs for the periods presented:

The following tables summarize quantitative information about the Company’s operating leases, under the adoption of ASC Topic 842*, Leases*:

Indemnification

In accordance with its certificate of incorporation, bylaws and indemnification agreements, the Company has indemnification obligations to its officers and directors for certain events or occurrences, subject to certain limits, while they are serving at the Company’s request in such capacity. There have been no claims to date, and the Company has director and officer insurance to address such claims. The Company and its subsidiaries and partner companies also provide indemnification of contractual counterparties (sometimes without monetary caps) to clinical sites, service providers and licensors.

Legal Proceedings

In the ordinary course of business, the Company and its subsidiaries and partner companies may be subject to both insured and uninsured litigation. Suits and claims may be brought against the Company by customers, suppliers, partners and/or third parties (including tort claims for personal injury arising from clinical trials of the Company’s product candidates and property damage) alleging deficiencies in performance, breach of contract, etc., and seeking resulting alleged damages.

15. Related Party Transactions

Founders Agreement

The Company has entered into Founders Agreements and, in some cases, exchange agreements with certain of its subsidiaries and partner companies as described in the 2025 Form 10-K. The following table summarizes, by partner company/subsidiary, the effective date of the Founders Agreements and Payment-in-Kind (“PIK”) dividend or equity fee payable to the Company in accordance with the terms of the Founders Agreements, exchange agreements, and the subsidiaries' or partner companies’ certificates of incorporation:

Management Services Agreements

The Company has entered into Management Services Agreements (the “MSAs”) with certain of its partner companies/subsidiaries as described in the 2025 Form 10-K. The following table summarizes the effective date of each MSA and the annual consulting fee payable by the partner company/subsidiary to the Company in quarterly installments:

Note 1: Checkpoint was acquired by Sun Pharma in May 2025 (see Note 3).

Note 2: Lemma’s MSA fee for the year ended December 31, 2026 is pro-rated for its 2026 effective date of its MSA.

Fees and Stock Grants Received by Fortress

Fees recorded in connection with Fortress’ agreements with its subsidiaries and partner companies are eliminated in consolidation. These include management services fees, issuance of common shares of partner companies in connection with third party raises and annual stock dividend or issuances on the anniversary date of respective Founders Agreements.

Shared Services Agreement with TG Therapeutics, Inc. (“TGTX”)

In July 2015, TGTX and the Company entered into an arrangement to share the cost of certain research and development employees. The Company’s Executive Vice Chairman, Strategic Development, is also Executive Chairman and Chief Executive Officer of TGTX. Under the terms of the agreement, TGTX reimbursed the Company for the salary and benefit costs associated with these employees based upon actual hours worked on TGTX-related projects. In connection with the shared services agreement, for the three months ended March 31, 2025, the Company invoiced TGTX$0.1 million related to this arrangement. There wasno amount invoiced to TGTX under this arrangement for the three months ended March 31, 2026.

Desk Share Agreement with TGTX

The Desk Share Agreement between the Company and TGTX, as amended, required TGTX to pay 65% of the average annual rent for the Company’s New York, NY office space. In connection with the Company’s Desk Share Agreement with TGTX for the New York, NY office space, for the three months ended March 31, 2025, the Company had paid $0.7 million in rent, and invoiced TGTX approximately $0.5 million for their prorated share of the rent base.

On March 15, 2026, the Company and TGTX entered into an amendment to the Desk Share Agreement agreeing to an equal allocation of the costs associated with the New York, NY lease during the term of the sublease (see Note 14) to the extent the costs are not reimbursed or otherwise paid by the subtenant under the sublease agreement. In connection with the amended desk share agreement, for the three months ended March 31, 2026, the Company recognized $0.7 million in lease costs, recorded in selling, general and administrative expense in the condensed consolidated statement of operations, and $0.7 million in capitalized sublease costs, recorded to other assets on the Company’s condensed consolidated balance sheet. The Company invoiced TGTX approximately $0.8 million for its proportionate share of these lease costs. At March 31, 2026, there was $0.5 million due from TGTX related to the amended desk share agreement, recorded to other receivables – related party on the Company’s condensed consolidated balance sheet at March 31, 2026.

Cyprium Debt Conversion Agreement and Promissory Note Payoff

On January 26, 2026, the Company entered into a Debt Conversion Agreement with Cyprium, whereby the Company agreed to convert $5.0 million of a total of $11.7 million owed by Cyprium under a promissory note, as amended, into approximately 2.5 million newly issued common shares of Cyprium. In March 2026, subsequent to the closing of the PRV sale (see Note 3), Cyprium made payments to the Company of the outstanding balances under the intercompany note, including accrued interest, and accrued expenses owed to the Company.

Board Services Agreement

In December 2016, Checkpoint entered into an advisory agreement effective January 1, 2017 with Caribe BioAdvisors, LLC (“Caribe”), owned by Michael S. Weiss, to provide the advisory services of Mr. Weiss as Chairman of the Board. Pursuant to the agreement, Caribe will be paid an annual cash fee of $60,000, in addition to any and all annual equity incentive grants paid to members of the board. In June 2023, Mr. Weiss assigned the agreement with Checkpoint to Hawkins BioVentures, LLC, also owned by Michael Weiss. For the three months ended March 31, 2025, Checkpoint recognized $32,000 in expense related to the advisory agreement, including $17,000 in expenses related to annual equity incentive grants. As Checkpoint was deconsolidated in May 2025 (see Note 3) there was no comparative expense in the three months ended March 31, 2026.

In January 2017, Mustang entered into an advisory agreement effective January 1, 2017 with Caribe to provide the advisory services of Mr. Weiss as Chairman of the Board. Pursuant to the agreement, Caribe will be paid an annual cash fee of $60,000, in addition to any and all annual equity incentive grants paid to members of the board. For the three months ended March 31, 2026 and 2025, Mustang recognized approximately $15,000 and $15,000, respectively, in expenses related to the advisory agreement.

Shared Services Agreement with Journey

On November 12, 2021, Journey and the Company entered into an arrangement to share the cost of certain employees. The Company’s Executive Chairman and Chief Executive Officer is also the Executive Chairman of Journey. Under the terms of the arrangement, Journey reimburses the Company for the salary and benefit costs associated with these employees based upon actual hours worked on Journey-related projects following the completion of its initial public offering in November 2021. In addition, Journey reimburses the Company for various payroll-related costs and selling, general and administrative costs incurred by Fortress for the benefit of Journey.

For the three months ended March 31, 2026 and 2025, the Company’s employees have provided services to Journey totaling approximately $13,000 and $12,000, respectively. At March 31, 2026, the Company’s total related party receivable due from Journey was $0.5 million, and primarily relates to reimbursable expenses incurred by Fortress on behalf of Journey.

Cyprium9.375% Series A Cumulative Redeemable Perpetual Preferred Stock Dividend Obligation

Pursuant to a private placement in August 2020, Cyprium sold 320,000 shares of Cyprium PPS. The Cyprium PPS was fully and unconditionally guaranteed by Fortress.

Pursuant to the terms of the Cyprium PPS, holders of record were entitled to receive a monthly cash dividend of $0.19531 per share, or $2.34375 per share on an annual basis. The Cyprium PPS was required to be redeemed in cash upon the first bona fide, arm’s-length sale of a Priority Review Voucher (a “PPS PRV Sale”) issued by the FDA in connection with the approval of CUTX-101. Upon a PPS PRV Sale, each share of Cyprium PPS would automatically be redeemed for an amount equal to twice the $25.00 liquidation preference, plus accumulated and unpaid dividends to, but excluding, the redemption date. Beginning 24 months after issuance, holders had the right to elect an exchange of the Cyprium PPS, with settlement at Fortress’ election in cash or Fortress’ Series A Preferred Stock. A mandatory exchange, also settleable at Fortress’ election in cash or Fortress’ Series A Preferred Stock, occurred on September 30, 2024 for any investors who did not opt to waive such mandatory exchange mechanism. Specifically, in September 2024, Cyprium offered holders the opportunity to waive enforcement of, and extend the mandatory exchange date to March 31, 2026, and therefore remain eligible to receive the redemption price upon a PPS PRV Sale, and waive the optional exchange right (the “PPS Extension”). Holders of 283,400 shares of Cyprium PPS opted into the PPS Extension.

The Company accounted for the Cyprium PPS as a financing obligation and recorded the carrying amount in the consolidated balance sheets as partner company perpetual preferred liability of $7.1 million as of December 31, 2025.

In addition, the Company concluded that the redemption feature associated with a PPS PRV Sale required bifurcation as an embedded derivative (partner company derivative liability), with remeasurement to fair value at each reporting date. The fair value of the embedded derivative was not material historically. As of December 31, 2025, although the NDA for CUTX-101 had been resubmitted and assigned a new PDUFA date of January 14, 2026, following the October 2024 Complete Response Letter, significant uncertainty remained regarding whether approval would be obtained, whether a PRV would be issued, and whether a PPS PRV Sale could be executed on a timely basis on agreeable terms prior to the March 31, 2026 mandatory exchange date. As a result, the fair value of the partner company derivative liability remained immaterial as of December 31, 2025.

In February 2026, the Company, Cyprium and an undisclosed buyer entered into a definitive agreement to sell Cyprium’s PRV for $205 million. Cyprium recorded the increase in the fair value of the partner company derivative liability of $7.1 million. The Cyprium PPS was automatically redeemed for an amount equal to twice the $25.00 liquidation preference, pursuant to the terms of the Cyprium PPS, in the amount of $14.2 million which was comprised of the $7.1 million partner company perpetual preferred liability and the $7.1 million partner company derivative liability. In March 2026, the sale of the PRV closed (see Note 3).

16. Segment Information

The Company’s reportable segments for operating income (loss) for the three months ended March 31, 2026 and 2025 consist of the following ($ in thousands):

Note 1: Includes Fortress and private subsidiaries primarily funded by Fortress, including Cellvation, Cyprium, Helocyte, Oncogenuityand Urica; and intercompany eliminations.

17. Revenues from Contracts and Significant Customers

Disaggregation of Total Revenue

Journey has the following actively marketed products: Emrosi, Qbrexza, Amzeeq, Zilxi, Accutane, Exelderm, Targadox, and Luxamend. All of Journey’s product revenues are recorded in the U.S. Other revenue for the three months ended March 31, 2026 consists of $40,000 recognized by Journey related to the Cutia Agreement (see Note 8) and royalty revenue of $77,000 recognized by Cyprium related to the agreement with Sentynl (see Note 3).

The table below summarizes the Company’s net revenue for the periods presented:

Significant Customers

For the three month periods ending March 31, 2026 and 2025, none of Journey’s dermatology products customers accounted for more than 10% of its total gross product revenue.

At March 31, 2026 and December 31, 2025, none of Journey’s dermatology products customers accounted for more than 10% of its total accounts receivable balance.

18. Income taxes

The Company and its subsidiaries are subject to US federal and state income taxes. Income tax expense is the total of the current year income tax due or refundable and the change in deferred tax assets and liabilities. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion, or all, of the deferred tax asset will not be realized.

The Company files a consolidated income tax return with subsidiaries in which the Company has an 80% or greater ownership interest. Subsidiaries in which the Company does not have an 80% or more ownership stake are not included in the Company’s consolidated income tax group and file their own separate income tax return(s). As a result, certain corporate entities included in these financial statements are not able to combine or offset their taxable income or losses with other entities’ tax attributes.

Income tax expense for the three months ended March 31, 2026 and 2025 is based on the estimated annual effective tax rate, and includes discrete tax impact primarily driven by 2026 federal and state income taxes related to the gain on sale of the PRV. For the three months ended March 31, 2026, the Company is recognizing an income tax expense of $5.1 million on a pre-tax income of $142.3 million, resulting in an effective tax rate of 3.6%. The Company expects a net deferred tax asset with a full valuation allowance and a 3.8% estimated annual effective tax rate for 2026. For the three months ended March 31, 2025, the Company recognizedno income tax expense resulting in an effective tax rate of 0%.